Malaysia may not meet its budget deficit target of 3.2 percent of the Gross Domestic Product (GDP) as outlined in the Eleventh Malaysia Plan (11MP).

This is because the government could end up coughing up for other unplanned expenditures, including the 1Malaysia Development Bhd (1MDB) disaster, Universiti Malaya’s Business and Accountancy Faculty dean Nazari Ismail said.

Nazari ( photo ) told a forum last night that "unplanned expenditures" would worsen under the current economic climate as the world is facing an economic slowdown, globally.

"It’s not going be easy for the government to control its expenditures, which include those to overcome effects of manmade disasters. For example, the property markets would collapse, as will 1MDB.

"Plays to meet this deficit target are just a political ploy to entice voters. In reality, the government usually misses its deficit targets," Nazari said at the forum on '11th Malaysia Plan: Can the targets be achieved?' at Universiti Malaya.

The 11MP targets a deficit-to-GDP of 0.6 percent, compared with the Tenth Malaysia Plan target deficit of 3.2 percent, which was revised from three percent following the drop in global oil prices.

Nazari also warned of the dependency on the economies of China and Singapore, as this could lead to credit binges, which in turn would bring severe consequences to the nation's economy.

Credit reliance means higher household debt

Credit reliance would lead to higher household debt levels while easing the private consumption growth in Malaysia.

"As you see, China and Singapore are our biggest trade and business partners.

"In early 2000s, countries such as Ireland and Spain enjoyed phenomenal growth but their economies crashed as they were too dependent on credit," Nazari said.

The 11MP plans to reduce the Malaysian government’s debt-to-GDP ratio to 45 percent by 2020 - even as it hit 54.6 percent last year and was the second highest among 13 emerging Asian markets, as reported by Bloomberg.

Other speakers who discussed the 11MP, which Prime Minister Najib Abdul Razak tabled in Parliament last week, were former deputy higher education minister Saifuddin Abdullah ( photo ) and PKR’s Pandan MP Rafizi Ramli.

Rafizi said the target of the previous Malaysia Plans, such as the 8MP and 9MP, had optimistically forecast 7.5 percent and six percent economic growth, with real growth measuring 4.7 to five percent, except for 2014.

"The six percent growth in 2014 is the only one on the dot. If this was the performance of a university student, he would failed. So, for 11MP, don't be overly optimistic about targets because the people can count, unlike some Umno members," Rafizi said.

Saifuddin ( photo ) said he was a bit disappointed with the 11MP as the government did not use the plan to start the migration of policies from a race-based economy to that of a needs-based economy.

However, Saifuddin insisted that the positive thing from the plan is that there was more inclusiveness in the thrusts, which are addressed at more bottom-level economic concerns.

"I was also expecting the migration from race-based economy to a needs-based economy

in the (11MP) plan.

"I'm not anti-bumiputera, but there should be better wording used for it," Saifuddin said, referring to the "bumiputera agenda" caveat in the plan.